U.S. Moves to Stockpile Oil
WASHINGTON -- The Bush administration next week will take a big step in filling up the nation's emergency oil stockpile by asking energy firms to turn over 22 million barrels of crude for the reserve instead of making cash royalty payments on oil drilled on federal lands, an official said.
A U.S. official told Reuters the plan would remove oil from a world market where prices have slumped on ballooning supplies from a mild U.S. winter and an economic slowdown. It would also help secure American oil supplies from a potential disruption in foreign crude imports, especially from the volatile Middle East.
The Interior and Energy departments will ask energy companies drilling on federal leases how much oil they would be willing to turn over to the government as royalty-in-kind payments.
The government's aim is to eventually obtain about 22 million barrels for the Strategic Petroleum Reserve (SPR), the report said. The royalty oil is part of the administration's plan to fill the reserve to its capacity of 700 million barrels by 2005.
Roughly 41 million barrels are scheduled to be delivered to the stockpile by energy firms over the next year. Some of that reserve oil was borrowed by companies when U.S. heating oil supplies were tight last winter.